Organisations like to be inventive with their reward offerings. Paying all employees a single salary, with no opportunity to earn any more during the year, may work for some employees and job roles, but might not engage or motivate others. The possibility of earning a bonus, however, works as an incentive to employees to go the extra mile - ultimately providing a benefit to both employer and employee.

XpertHR Salary surveys collect bonus data from all survey participants, resulting in a huge set of data on bonus payments and their value. Here, we examine the number of employees receiving a bonus, and what these payments are worth. We are able to provide breakdowns of the data by job level, function and industry sector.

The data is from 432 organisations, who provided information on 119,707 individuals, from entry-level positions to chief executive. Taken from organisations' payroll data, the article examines basic salary and bonus data - defined as "the amount of any cash bonus paid to this individual in the previous 12 months". The bonus data excludes commission payments and non-cash rewards.

Payment of bonuses

The most common type of bonus scheme in operation is one paid based on organisation and personal performance - this type of scheme covers 29.9% of employees in our sample. This is followed by personal performance-related bonuses, available to 8.6% of employees. However, being covered by a bonus scheme doesn't necessarily mean that everyone will receive a payment - among our sample of almost 120,000 individuals, around one-third (32.1%) were paid a bonus.

For the purposes of predicting whether or not an individual is likely to receive a bonus in a given year, the strongest indicator is whether or not they received a bonus in the previous year. According to our data, 89.4% of individuals who received a bonus this year also received one last year.

Across the whole sample, the average bonus payment is £4,908, which is worth 11.5% of the £42,507 average basic salary. However, there are wide differences by job level, function, and sector.

Bonuses by job level

XpertHR Salary surveys provide information by 12 job levels, ranging from entry level to chief executive. Broadly speaking, the more senior the job level, the more likely it is that the individual will have received a bonus (see table 1).

One exception to this rule is chief executives, where we find that just 25.9% of individuals received a bonus. However, it is probable that individuals at this level are party to other financial incentive plans. The job level most likely to receive a bonus is function head, with 57.7% of individuals receiving a payment.

Without exception, the value of bonus payments increases with seniority. The highest average bonus payment, of £79,326, was made to chief executives. However, senior directors recorded the highest value of bonus as a percentage of salary, with the average bonus worth 41.8% of the average salary for the role. At the other end of the scale, entry-level employees received an average bonus of £689, worth just 3.6% of the average basic salary.

Bonuses by function

Analysis by 13 broad job functions reveals that individuals engaged in pensions and insurance roles are most likely to receive a bonus, as 62.4% had done so in the past year (see table 2). This is some way above the 46.3% of individuals working in standards, health and safety, and regulations enforcement who had been paid a bonus. PR, press and publishing roles, and those in general management and administration, are least likely to have been paid a bonus.

The highest average bonus payments (£8,818) were made to individuals working in sales roles, followed by those working in a finance capacity (£6,025). When measured as a percentage of basic salary, sales (average bonus worth 19.8% of the average basic salary), and pensions and insurance (12.8%) roles, recorded the highest value of bonuses.

Table 2: Bonus payments by job function

Job function

In receipt of bonus, %

Average basic salary, £

Average bonus, £

Bonus as a % of basic salary

General management and administration

19.6

39,351

4,561

11.6

Purchasing and procurement

36.7

46,744

3,735

8.0

Distribution, supply chain and retail

21.0

28,472

1,572

5.5

Finance

38.9

48,220

6,025

12.5

Pensions and insurance

62.4

28,986

3,708

12.8

Consultant and project management

35.1

50,840

4,508

8.9

IT

44.9

47,862

4,685

9.8

Sales

37.8

44,619

8,818

19.8

Marketing

34.2

44,260

4,984

11.3

Combined sales, marketing, contact centre

30.1

28,727

2,458

8.6

PR, press and advertising

23.3

50,095

5,514

11.0

Standards, health and safety and regulations enforcement

46.3

43,352

4,438

10.2

Human resources

29.9

48,412

5,812

12.0

Source: XpertHR Salary surveys.

Bonuses by industry

Examination of the data by industry reveals a wide spectrum of practice between different sectors. Overall, just 4.9% of individuals employed in the public sector received a bonus, but this jumps to 50.7% in manufacturing-and-production companies, and to 51.8% in private-sector-services organisations. Just 10.3% of individuals working in charities and not-for-profit organisations received a bonus.

Within the public sector, bonuses were most common in central government (19.2%). In the manufacturing-and-production sector, the majority of individuals in the engineering and metals (93.5%), general manufacturing (70.1%) and chemicals (52.7%) sectors received a bonus payment. Within private-sector services, the finance sector recorded the most individuals receiving a bonus (75.4%).

Overall, the highest bonuses were found in the manufacturing-and-production sector, at an average £5,854, or 12.7% of the average basic salary. The average bonus in private-sector services was £4,948 (11.9% of salary), and just £1,622 (4.2% of salary) in the public sector.

Broken down further, the highest value bonuses by sector were found in the paper and printing sector, at £10,322, or 19.6% of the average basic salary. In contrast, the lowest average bonus payment was in the local government sector, where the £787 payment was worth 1.7% of the average basic salary.

Bonuses by gender

Across our sample, 39.5% of male individuals received a bonus, compared with 26.7% of females. Examination of the data by age reveals further discrepancies between the sexes (see chart 1). While overall the likelihood of receiving a bonus peaks when male employees reach age 44-47, for females this happens at just 40-43 years of age.

Chart 1: Percentage of men and women in receipt of a bonus, by age

Source: XpertHR Salary surveys.

By value, the vast majority (84.1%) of females in receipt of a bonus received a payment worth less than £5,000. The proportion of males receiving a bonus of this amount is slightly less, at 71.7%. In contrast, 4.4% of males in receipt of a bonus received £25,000 or more, compared with 1.5% of females.

Bonuses by other variables

We also examined the likelihood of individuals receiving a bonus by a number of organisation and employee characteristics, revealing the following:

By organisation size - the largest organisations were found to be slightly more likely to pay a bonus than their smaller counterparts. While 32.8% of individuals in firms with 1,000 or more employees received a bonus, this fell to 30.2% in organisations with between 250 and 999 employees, and again further to 28.4% in the smallest businesses with fewer than 250 staff.

By performance rating - bonuses were most likely to be paid to individuals who were recorded as "exceeding expectations" at their latest performance review - 50.7% of employees with this rating received a bonus. This compares with 38.6% of employees rated as having "met expectations". However, it is perhaps surprising to see that 22.2% of individuals described as "developing" or "did not meet expectations" also received a bonus payment.

By age - the likelihood of receiving a bonus increases with age, but deteriorates after middle age. While just 19.5% of individuals aged 20-23 received a bonus, this rises gradually to 37.3% of individuals aged 44-47. From then on, the proportion of individuals receiving a bonus falls, with 28.8% of individuals aged 64-67 being paid a bonus.

By length of service - broadly speaking, the longer an individual has been with an organisation, the higher the chance of them being paid a bonus. Among individuals with 40 years' service with their employer, 57.3% received a bonus. However, a fortunate 28.9% of new employees received a bonus from their employer.

Our research

This article is based on XpertHR Salary survey data for 119,707 individuals employed in 432 organisations. The data is current as at 1 February 2017. The data is analysed based on XpertHR job levels (entry level to chief executive), job functions (13 broad groupings) and industry (private-sector services; manufacturing and production; public services; and sub-industries within these). Of the total sample, 38,447 individuals in 224 organisations received a bonus, and form the basis of our analysis.

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